China, known for being the world’s largest EV market, is home to a highly competitive landscape. In 2023, sales of new energy vehicles, including both hybrids and battery EVs, surged by 38% to reach 9.49 million units, according to data from the China Association of Automobile Manufacturers. When placed in the global context, these figures indicate that China was responsible for almost 70% of all EV sales last year. As the world steadily embraces electric vehicles, China’s affordable EVs are gearing up for global dominance—a prospect that sends shivers down the spine of legacy automakers and Tesla CEO Elon Musk.
The Rise of Chinese EV Makers
Three Chinese EV makers—BYD, Nio, and Li Auto—have made it to the Asia Future 30, Fortune’s list of companies in the region best positioned for future growth. BYD, the EV giant backed by Warren Buffett’s Berkshire Hathaway, is perhaps the most notable of the three. The company began as a battery maker and last year, it dethroned Tesla as the world’s top seller of battery EVs. Nio and Li Auto, both startups, target the premium end of the market, competing with brands like U.S.-headquartered Tesla.
The Chinese government has been actively encouraging the development of the EV sector since the early 2010s, providing subsidies to both manufacturers and consumers. This has led to the emergence of approximately 100 EV makers in China, making it the most competitive EV market in the world. However, the competitive nature of the market has also resulted in consolidation, with several companies exiting the market. With the pace of growth in China’s EV market showing signs of slowing, there could be an issue of oversupply.
What Sets These Companies Apart?
What sets these companies apart from each other is their unique strategies and capabilities. For instance, BYD’s history as a battery maker gives it an advantage. The company has an in-house battery technology that it touts as a safer option than the lithium-ion batteries used in most EVs. In addition, BYD has successfully vertically integrated operations and is looking to expand overseas.
Li Auto, on the other hand, took a different route by focusing on plug-in hybrids rather than pure electric vehicles. Li Auto, often referred to as a Tesla competitor, targets the premium market in China. The company has only recently entered the battery electric vehicle space with its Li Mega, the startup’s recently announced minivan.
Nio, like Li Auto, positions itself as a premium brand. However, the company is placing a greater focus on R&D, design, and the user experience. For example, it has launched a Nio phone to be used with its cars, invested in a battery swapping network, and is pushing a battery leasing option.
Looking Forward
While these companies continue to dominate in China, the journey ahead is not without challenges. They will have to navigate an increasingly competitive EV market, regulatory hurdles, and financial pressures. However, their unique strategies and relentless focus on innovation set them apart from the competition and position them well for future growth.
For more insights into the future of the EV market, BCG and Fortune have partnered to create the Asia Future 30, a list of companies across Asia poised for future growth. The list can be accessed here.
Fortune is also hosting the inaugural Fortune Innovation Forum in Hong Kong on March 27–28, where experts, investors, and leaders of the world’s largest companies will discuss “New Strategies for Growth,” or how companies can best seize opportunities in a fast-changing world.
